In equity market, funds mostly came from initial public offers (IPOs) and issuance of shares to institutional investors.

NEW DELHI: Indian companies have raised nearly Rs 6 lakh crore from equity and debt instruments in 2018, but volatile market conditions brought down the kitty by 30 per cent and political uncertainties ahead of the 2019 general elections may again cast a shadow on fund-raising activities in first half of the new year.

Experts, however, are hopeful the fund-raising will gather steam in second half of 2019 with a pick-up in the overall investment climate.

The data shows the debt market remains the most preferred route for raising funds to support business needs of the corporate world.

Out of the cumulative Rs 5.9 lakh crore garnered so far this year from capital markets, a large chunk or Rs 5.1 lakh crore has been mopped up from the debt market and the remaining amount of about Rs 78,500 came from equity markets, figures compiled by data analytics major Prime Database showed.

In equity market, funds mostly came from initial public offers (IPOs) and issuance of shares to institutional investors.

The final figures may go up to end the year at around Rs 6 lakh crore for debt and equities, experts said.

The funds have been raised mainly for business expansion plans, loan repayments and to support working capital, while a large amount raised from IPOs also went to the promoters, private equity firms and other existing shareholders for part or full sale of their investments.

Rajendra Naik, MD (Investment Banking) at Centrum Capital said the later part of 2018 has been challenging for equity markets due to both global and domestic factors.

"Globally, crude oil price saw almost 20 per cent increase between August-October of this year. Further, bond yield curves have risen during the same period.

"On domestic front, we have seen increase in petrol and diesel prices to all-time high rates and interest rates have also moved up. Also, the impact of IL&FS default and tightening of liquidity for NBFCs had a negative sentiment on the equity markets," he said.

Naik said the state elections in December also kept many investors away, with several factors leading to subdued interest for equities during the year.

Of the total Rs 5.1 lakh crore mopped up through placement of debt securities, Rs 4.8 lakh crore came from private placement and over Rs 29,600 crore through public issuance.

Despite getting regulator Sebi's go-ahead to float initial share-sales worth over Rs 60,000 crore in 2018, the year saw a total of 24 IPOs raising only Rs 30,959 crore. This was much lower than 36 firms collecting a record amount of over Rs 68,000 crore through initial share-sales in 2017.

The capital markets regulator has also voiced concern over the slow pace of primary issues, despite a good market condition. Sebi Chairman Ajay Tyagi has asked investment bankers to do more "diligence" on pricing front to get investors in.

"The IPOs are not taking place is something that's a cause of worry," Tyagi said, while observing that companies have found alternatives like preferential issues to raise money.

However, the small and medium enterprise (SME) platform witnessed hectic activities in the IPO space, raising Rs 2,254 crore in 2018 -- much higher than Rs 1,679 crore collected last year.

Marketmen believe outlook appears challenging for initial part of the new year on the IPO front due to the general elections, expected to take place in first half of the year.

"Fund raising through IPOs will be slightly lower in 2019 as compared to 2018 because of several factors including general elections, poor market sentiments and depreciating currency," said Ashok Lalwani, Global Chair of India Practice at Baker McKenzie.

Reliance Securities CEO B Gopkumar said, "The initial part of 2019 is likely to be challenging till Lok Sabha election results are out. After that if a stable government were to be formed then market volatility will reduce and IPO market will pick up significantly. Thus, we see an encouraging second half next year compared to tepid first half."